RATIO ANALYSIS
The items appearing in financial statements will be meaningful and useful to the executives; owners; creditors etc… provided they are properly analyzed in such a way that one item is compared with another. Ratio analysis is one of the tools with the help of which analysis of financial statement is done. Ratio analysis helps the calculation of number of accounting ratios with the help of items found in financial statements. It helps for the comparison of the accounting ratio with those of previous years or those of other concerns engaged in similar line of business etc…. CLASSIFICATION OF ACCOUNTING RATIOS

The ratios are classified into:
1. Liquidity ratios
2. Leverage ratios
3. Turnover ratios
4. Profitability ratios

1. Liquidity ratios are also known as short term solvency ratios depicts the liquidity or the short term solvency. It is further classified as follows; a) Current ratio
b) Quick / acid test ratio
c) Absolute liquidity ratio
a) Current ratio: It expresses the relationship between current assets and current liabilities. The ideal current ratio is 2:1. If the actual ratio is 2:1 or more than this, it indicates the liquidity or short term solvency. b) Quick / acid test ratio: Quick ratio establishes the relationship between quick assets and quick liabilities. The standard or ideal quick ratio is 1:1. If the actual quick ratio is more than 1:1 it denotes the concern can pay off its short term liabilities out of its quick realizable assets. c) Absolute liquidity ratio: It is more rigorous ratio to measure the liquidity concern. The ideal absolute ratio is 1:2. 2. Leverage ratios measure the relative interest of the owner and creditors of the concern. It indicates the risk of the creditors as against the owners and long term financial position. It is further classified into: a) Debt equity ratio

b) Debt service coverage/fixed charges cover ratio
c) Capital gearing...

...RatioAnalysisRatioanalysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Analysis and interpretation of various accounting ratios gives skilled and experienced analyst a better understanding of the financial condition and performance of the firm than what he could have...

...1.1.1 Financial Performance Analysis.
The financial statement provides the basic data for financial performance analysis.
Basic limitation of the traditional financial statement comprising the balance sheet and the profit and loss account is that they do not give all the information regarding the financial operations of a firm. Nevertheless, they provide some useful information to the extent the balance sheet mirrors the financial position on a particular...

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RATIOANALYSISRatioanalysis is a key dimension of financial management, suggesting a relationship between profit and loss as mentioned in the balance sheet of an organization.
In Latin ‘ratio’ means reason. In English ‘ratio’ means relationship. Ratioanalysis is defined as “the establishment of a reasoned relationship” of a fixed variable character...

...C. OVERALL ANALYSIS OF ALL COMPANIES
LIQUIDITY: CURRENT RATIO
The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. From the table it shows that Ajinomoto (M) Berhad is the highest liquidity. The ratio is 5.38, followed by Padini Holding Berhad at 2.37 and 3rd British American Tobacco with ratio at 1.91. Therefore, we can see...

...METHODIST UNIVERSITY COLLEGE GHANA
FACULTY OF BUSINESS ADMINISTRATION
LEVEL 300
FINANCIAL ACCOUNTING IV
RATIOANALYSIS OF FML UN-AUDITED ACCOUNTS OF 2010 AND 2011
Name Index No Programme
1. Osumanu-Sulemana Amidu BBAA/ET/123001 Accounting
2. Emmanuel Addae BBAA/ET/ 117726 Accounting...

...RatioAnalysis Paper
Ratios describe the various relationships among accounts in the balance sheet and income statement. Financial ratios are important and helpful gauges of how an organization is functioning. An organization’s financial health, potential revenue, and even possible bankruptcy can be garnered from financial ratios. Information derived from financial statements is used to calculate most...

...CHAPTER 5—BASICS OF ANALYSIS
MULTIPLE CHOICE
1. Statements in which all items are expressed only in relative terms (percentages of a base) are termed:
a. Vertical Statements
b. Horizontal Statements
c. Funds Statements
d. Common-Size Statements
e. none of the answers are correct
ANS: D PTS: 1
2. In financial statement analysis, ratios are:
a. the only type of analysis where industry data are available
b. absolute...

...Financial ratioanalysis
A reading prepared by Pamela Peterson Drake
OUTLINE
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Introduction
Liquidity ratios
Profitability ratios and activity ratios
Financial leverage ratios
Shareholder ratios
Introduction
As a manager, you may want to reward employees based on their performance. How do you know
how well they have done? How can you determine what departments or divisions...